By Jenna Telesca and Ben Eisen
Warren Buffett's Berkshire Hathaway Inc. is betting on some of the largest firms chasing a Covid-19 vaccine.
The Omaha, Neb., conglomerate recently made new investments in large pharmaceutical companies Merck & Co., Bristol Myers Squibb Co. and AbbVie Inc., investing between $1.8 billion and $1.9 billion in each, according to public filings. Berkshire also made a new, smaller investment in Pfizer Inc. of $136 million.
Berkshire made these investments sometime in the quarter ended Sept. 30, well before Pfizer, BioNTech SE and Moderna Inc. reported positive results from late-stage trials of potential vaccines.
"Historically, Buffett has stated that, if he were to invest in the pharmaceutical industry, it would likely be that he takes a basket approach and buys a handful of companies instead of a very large stake in just one," Berkshire investor and Cheviot Value Management LLC portfolio manager Darren Pollock wrote in a note.
Mr. Buffett generally invests in stable industries he expects to grow over time, suggesting he expects the broader pharmaceutical world to profit from eventual Covid-19 vaccines and therapeutics. Berkshire's recent investments give insight into how he believes the coronavirus pandemic will shape American businesses for the long term.
Overall, Berkshire's largest stock investments remain Apple Inc., Bank of America Corp. and Coca-Cola Co.
The 90-year-old Mr. Buffett might or might not have made these investments himself. Berkshire employs two portfolio managers, Todd Combs and Ted Weschler, who make many of Berkshire's equities investment decisions. When Mr. Buffett eventually steps down from running Berkshire, Messrs. Combs and Weschler are on the shortlist of potential successors, along with two vice chairmen: Greg Abel and Ajit Jain.
The purchases come after Berkshire Hathaway trimmed its airline holdings earlier this year as the pandemic struck. In May, Mr. Buffett disclosed Berkshire had sold its stakes in United Airlines Holdings Inc., American Airlines Group Inc., Delta Air Lines Inc. and Southwest Airlines Co.
"The airline business has the problem that if the business comes back 70% or 80%, the aircraft don't disappear," he said during Berkshire's virtual annual meeting. "The world changed for airlines."
Berkshire unloaded more bank stocks in the third quarter.
The conglomerate roughly halved its remaining stake in Wells Fargo & Co., further whittling down its holdings in a bank it has owned for more than three decades. Berkshire also sold nearly all of its remaining stake in JPMorgan Chase & Co. The moves continue the billions of dollars worth of sales of both firms in the second quarter.
Meanwhile, Bank of America appears to be emerging as Mr. Buffett's favorite bank. His firm increased its share holdings by about 9% last quarter. Berkshire now owns nearly 12% of the company, according to FactSet, above the 10% threshold Mr. Buffett has said he typically tops out at.
Berkshire has also invested heavily in its own stocks in the first three quarters of the year, making $15.7 billion in stock buybacks. These buybacks rank among the largest investments Berkshire has ever made.
Investors and analysts continue to wait for Mr. Buffett to spend a larger chunk of Berkshire's $150 billion cash pile on an acquisition or a significant stake in a company. In recent months Berkshire purchased Dominion Energy Inc.'s midstream energy business and invested $6 billion in five Japanese companies.
"The portfolio has really taken on a new economy look," said James Shanahan, senior equity research analyst at Edward Jones.
Last quarter, Berkshire invested almost $276 million in T-Mobile US Inc.
Mr. Shanahan said the portfolio has become more balanced with more technology and telecommunications positions in recent years and reduced exposure to financial services.
Write to Ben Eisen at email@example.com
(END) Dow Jones Newswires